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Court of First Instance decides whether Nina Wang has bequeathed her fortune as an absolute gift or a charitable trust

In its decision of 22 February 2013 the Court of First Instance ("CFI") decided that, on its true construction, Nina Wang's Will gave her considerable fortune of about HK$82.86 billion to the Chinachem Charitable Foundation Limited ("Foundation") to be held on trust to be used in accordance with the charitable purposes provided for in the Will. The Foundation had argued that Ms Wang's estate had been given to the Foundation as an absolute gift to be applied by the Foundation in accordance with its purposes as they exist from time to time.

This decision represents a further episode in the legal battles surrounding the vast estate of Nina Wang and the fortune that she has left to the Foundation. The bulk of Ms Wang's fortune consists of her sole ultimate shareholding in the Chinachem Group. The CFI was asked to construe Ms Wang's Will. Whereas the Secretary for Justice representing the interests of charity argued that the Will provided for a charitable trust, the Foundation argued that the estate had been bequeathed as an absolute gift and that the Will merely set out non-binding guidance as to how the wealth should be used. The Will had been drafted without legal assistance and provided that Ms Wang's estate pass to the Foundation to be used to continue with "all projects which it has undertaken since its establishment" and to achieve the "setting up of a fund and Chinese prize similar to the Nobel prize". The Will also requested that the Foundation provide for the senior members of the Wang family and their offspring as well as the staff of the Chinachem Group and their children (this particular section of the Will was held to be a power rather a prescription).

The CFI applied generally accepted rules of construction according to which it is necessary to ascertain the testamentary intentions of the testator looking at the Will as a whole and taking into account the circumstances surrounding the testator when she made her Will (the so-called "arm-chair principle"). The CFI started its analysis by setting out the three classic "certainties" of a charitable trust, ie (i) certainty on behalf of the donor to create a trust, (ii) certainty of an exclusive charitable intention, and (iii) certainty as to subject matter of the trust. Further, the CFI acknowledged the general rule that a bequest to a charitable company is usually construed as a gift, unless there are circumstances to show that the testator intended to impose a trust.

The factors which persuaded the CFI that the bequest constituted a charitable trust rather than an outright gift can be summarised briefly as follows:

the use of the word "wish" in the Will demonstrated a clear intention on behalf of Nina and did not denote a mere aspiration;

the Foundation's Memorandum did not fully cover the charitable intentions expressed in the Will (ie it did not cover the setting up of a Chinese prize) and thus the Will created an additional purpose;

the setting up of the Chinese prize and the provision which required the Foundation to continue all the projects which it has undertaken since its inception were clear, charitable purposes;

Ms Wang had provided for the Foundation to be run under the supervision of a Managing Organisation and had therewith made it clear that she did not want to give the Foundation and its directors complete free rein after her death;

Ms Wang had also provided that the Foundation hold her shares in the Chinachem Group and maintain its status as ultimate shareholder to enable the Foundation to carry out her directions.

Although the CFI acknowledged that the Board of the Foundation would have to exercise their best judgment as to how to give effect to the charitable purposes and had considerable discretion when doing so, this did not detract from the fact that the directions given by the testator were mandatory and therefore created a charitable trust.

Take-away point: Although the CFI came to a decision that most likely carried the intentions of the testator into effect, disputes such as these may be avoided if Wills are drafted with greater clarity and specificity and, often crucially, after taking legal advice.

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